'Time is right' for private equity revival, with back-to-basics focus

BUSINESS adviser PricewaterhouseCoopers says "the time is right" for private equity to make a comeback and that a "few good value deals" are all that is needed to encourage more vendors and investors to come forward.

Jason Morris, transaction services partner at PwC in Scotland, admits there has been a recent "dearth" of transactions backed by private equity (PE) investors over the past 18 months. PE groups have until now been focused on ensuring the health of existing investments. They have also struggled to find lenders to back deals.

"There is growing consensus that the time is right for the private equity revival to commence, and indeed we have already seen some activity in Scotland in the last quarter such as LDC's 17 million investment in Subocean Group and Lyceum's 22m acquisition of McKinnon & Clarke," said Morris.

"We are aware of other deals in various stages and if they can be achieved at the right price and are viewed as good value for both vendor and investor, this will hopefully go some way to jump-starting the market," he added.

He said the "days of excessive financial engineering" common to PE-backed deals were over and that instead PE houses would focus on "back to basics" strategy that involved less debt and more specialist investing.

"PE houses have been watching and waiting for market conditions to improve and while we are now seeing this community express an appetite to do deals in the mid-tier market, it is more likely that those that do complete will be more conservatively leveraged and more dependent on underlying business growth to achieve returns," he said.

The firm said new deal activity has so far been focused on more "recession proof" sectors such as energy, healthcare and financial services, with property and construction much less attractive.

• Another PWC report today predicts that two in five office workers intend to watch World Cup football matches that will be screened during office hours.

About 14 per cent will be watching at work with permission from their employer, but 5 per cent intend to watch without permission or by calling in sick.

Employers can also expect about 9 per cent of staff to take annual leave with a further 11 per cent taking advantage of flexible working.